The Payment Systems Regulator (PSR) is to be abolished as the latest step in government efforts to reduce the burdens on business. If the UK government is to be believed, the move to merge the PSR into the FCA is the latest step in its drive to boost economic growth that puts more money in working people’s pockets.
The government will set out further steps to reduce red tape in the coming days. According to the government, merging the PSR into the Financial Conduct Authority will make it easier for firms as they will have just one port of call.
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Industry reaction is generally positive with some noted caveats.
Jim Conning, Banking & Alliances Director at AccessPay
While streamlining regulatory frameworks is fundamentally positive and reduces unnecessary complexity, there’s a significant risk in this transition that must be addressed. The specialised expertise within the PSR has been instrumental in driving targeted innovation in UK payment systems. Any dilution of this knowledge base could severely hamper our progress and potentially damage the UK’s hard-earned reputation for payment excellence.
The government’s focus on economic growth is understandable, but we must ensure this regulatory consolidation preserves what we have already built. If we lose this critical knowledge during the transition to the FCA, we risk wasting time and resources while eroding the consumer and organisational trust that’s been painstakingly built.
The industry will be watching closely to see how this expertise is preserved and deployed in the new structure.
Naresh Aggarwal, Policy and Technical Director at the Association of Corporate Treasurers
The announcement to abolish the Payment Systems Regulator does not come as a surprise given recent news stories, but what is vital is what happens next.
While there is understandable focus on consumer outcomes, innovation and investment in the payments system supports business growth and productivity. It’s a vital utility that allows companies to move money around the economy more efficiently. Moving money more quickly can enable more sales as trust and transparency reduce credit risks. It can also enable small, but high growth potential companies grow with less of a drain on scarce liquidity and working capital. Importantly it can support innovation that can be exported to other countries too.
It is therefore important that we continue to deliver on the National Payments Vision alongside the next phase of open banking will help to reduce the friction in the payments system.
It would be a wasted opportunity if this was simply a rebranding exercise or even worse it led to consultations that slow down important progress that support companies and the wider objectives of growth.
Jonathan Frost, Director of Global Advisory for EMEA at BioCatch
The closure of the PSR appears to be little more than a branding exercise. As a subsidiary of the FCA, sharing both office space and personnel, its functions are already deeply integrated. Beyond dropping a logo, it’s unclear what, if anything, will materially change.
Good consumer outcomes in the financial services sector depend on the effective regulation of payment services. Given this, it makes sense for a single agency to ensure that financial institutions adhere to the expectations set out in the FCA’s Consumer Duty.
Scott Dawson, CEO of DECTA
It’s official, the UK Government is scrapping the Payments Systems Regulator (PSR) and folding it into the Financial Conduct Authority (FCA). Others could follow, with the prime minister set to make a speech later this week. While it was previously reported the FCA was also seeking to ditch policy proposals and is committing to launch fewer “large-scale” initiatives over the next five years, as it steps up efforts to support Britain’s flagging economy.
As we take a breath on this news, I believe there is a key point we must focus on: you can have effective regulation without bureaucracy and thereby, getting rid of bureaucracy shouldn’t get rid of effective regulation. The PSR/FCA news in some sense is irrelevant – we must ensure that any initiatives are effective. While regulation is rarely popular and financial companies too often try to circumvent them, we have an example from living memory of what happens when the sector is unregulated – the 2008 financial crash happened, in large part, because of a lack of effective regulation.
I’m confident this story will develop at pace over the next week and clearly be a major talking point in the PM’s speech, as it’s following a trend of, so-called ‘purging’ under the current Government – the chairman of the Competition and Markets Authority, Marcus Bokkerink , was removed last month amid concerns that it was hindering growth. Bokkerink was replaced by Doug Gurr, a former Amazon executive and both the chair and chief executive of the Financial Ombudsman Service have announced plans to step down.
Ultimately, we need alignment from authorities to avoid superfluous red tape. That being said, the quantity and quality of payments regulation is increasing – DORA was introduced this year and PSD3 will soon be released to improve upon the already transformative Payment Services Directive. But we’re seeing different headlines now.
Dima Kats, CEO and Founder of Clear Junction
Today’s announcement comes as no surprise, as the UK’s National Payments Vision (NPV), unveiled in November 2024, foreshadowed the abolition of the PSR. This is a positive step forward, showing that the UK government is not just setting out a vision for payments but actively implementing it. Regulatory red tape has increased dramatically in recent years, making it harder for businesses like ours to navigate. We welcome this move to streamline oversight, as it will help reduce complexity and create a more efficient regulatory environment.
The FCA and PSR haven’t always been fully aligned, which has created challenges for the industry. Consolidating oversight under one regulator should improve coordination, providing clearer and more consistent regulation. We fully trust that the FCA can regulate this industry effectively – ensuring the integrity of financial infrastructure, fostering competition, and ultimately delivering the best outcomes for consumers.
Willem Wellinghoff, Chief Compliance Officer and UK Chair of Ecommpay
As a global payment processor and merchant acquirer, Ecommpay acknowledges the UK Government’s commitment to streamlining regulation, simplifying the amount of regulators that companies have to manage, and fostering economic growth through its deregulatory agenda. We are overall supportive of the rationale behind consolidating regulatory oversight to reduce complexity and support the National Payments Vision.
However, we believe that abolishing the Payment Systems Regulator (PSR) at a time when the efficacy and resilience of payment systems, as well fraud risk management, are under intense review and focus, may not be the most opportune course of action. The payments industry is evolving rapidly, and with increased scrutiny on payment services and electronic money providers, maintaining a robust and dedicated regulatory framework is critical to ensuring stability, innovation, and consumer protection in support of the National Payments Vision.
While we support an improved and effective regulatory environment, we express concern that the Financial Conduct Authority (FCA) already operates under significant pressures. Absorbing the PSR’s responsibilities into the FCA risks adding further complexity to an already demanding agenda, potentially disrupting the ongoing development and supervision of the UK payments ecosystem with a view to kickstart growth.
We urge the Government, the FCA, the Bank of England and the PSR, to ensure that any transition results in a more harmonised and effective approach to regulating payment systems and services that will not erode trust in the UK payments ecosystem, and enhances the regulatory agenda without introducing further challenges to industry. A strong, dedicated focus on payment regulation remains essential to safeguarding industry growth, consumer trust, and the UK’s position as a global leader in payments innovation.
Ecommpay remains committed to working collaboratively with the Government, regulators, trade associations, and industry stakeholders to ensure that the UK payments landscape continues to thrive under a regulatory framework that balances oversight with innovation.
Dan McLoughlin, Fraud Specialist at Lynx
All financial institutions will welcome the Government’s ambitions to simplify the overly complex UK regulatory market. In the long term, this initiative makes sense and could even benefit consumers directly. The Financial Conduct Authority (FCA) is already widely recognised by consumers, unlike the PSR, so this merger could lead to increased consumer understanding of regulations and the outcomes they are entitled to.
The challenge is the short term. As the Payment Systems Regulator (PSR) is wrapped into the FCA, we’ll likely see a slowdown in relation to the latest PSR regulations. There is bound to be disruptions as the entities merge, and this is coming at a crucial time in the regulation lifecycle – particularly in relation to fraud. The PSR has played a crucial role in fraud regulation, and banks continue to lose hundreds and thousands of pounds to fraudulent transactions every year. As the fight to stop criminals continues, having a regulator that is slow to react to the market poses significant risks. All eyes will be on the FCA over the next few months, particularly to see how short term risks are managed.
Laurent Descout, CEO and co-founder at Neo
As responsibilities shift away from the PSR to the FCA, it is essential that fintech firms, which are improving efficiency, reducing costs, and expanding access to financial services, are given the right regulatory environment to thrive. A clear and forward-looking approach will help maintain the UK’s position as a global leader in payments and ensure a competitive, dynamic market that benefits businesses and consumers alike.
Jonathan Herbst, Global Head of Financial Services at Norton Rose Fulbright
This latest announcement strikes a bold tone but as it stands it isn’t really changing anything other than moving the PSR into the FCA.
The industry has previously expressed a number of concerns around the PSR, so visually this comes across rather well. What’s more, the consolidation of this regulation into the FCA – given its broader remit for financial services regulation – arguably makes sense. However, the proof will be in the pudding as to whether this really results in any substantive changes to the types and the approach of the regulation.
Zaki Farooq, Chief Technology Officer and co-founder of PayFuture
The abolition of the PSR and the shift to the FCA represents a major regulatory shake-up for the UK payments sector. Regulatory consistency is essential to fostering innovation and cross-border growth. On the positive side, streamlining oversight could reduce operational friction and make compliance more predictable, which is particularly beneficial for fintech firms working across multiple jurisdictions. However, the PSR was a strong advocate for payments innovation and competition. The UK has long positioned itself as a fintech powerhouse. To retain this status, the transition must not come at the cost of progress in financial inclusion, next-gen payment technologies, and cross-border payment accessibility.
Gilbert Verdian, CEO and Founder at Quant
The new government’s mission to increase competitiveness by reducing red tape and bureaucracy needs drastic change. In terms of payments, the confusion to which regulator to focus on by banks has been evident since the introduction of the PSR and the shuffling of schemes and responsibility between authorities has created a clouded view of compliance to regulations. This change puts the focus purely on a single regulator and a single point of contact. As the landscape of financial services is evolving with the introduction of digital finance, regulatory evolution is needed to meet and govern the market’s needs.
Miles Celic OBE, Chief Executive Officer, TheCityUK
The FCA’s decision gives firms and investors greater certainty and predictability, which is good for the UK’s international competitiveness and wider economic growth. It is hugely positive that the FCA has been willing to proactively and constructively engage with industry on this issue – especially given the significant impact the proposed changes would have had on the UK’s status as a world-leading international financial centre. We look forward to continuing this positive engagement to support their commitment to the competitiveness of the UK’s regulatory environment and the government’s growth mission.
Tony Craddock, Director General of The Payments Association
If regulators adhered to the rules of the market, the PSR and FCA would have merged years ago. The PSR was beyond its ‘use by’ date, with its structure and governance designed for a different world. Today’s world demands resourceful, agile, responsive regulators that are in tune with the market. A world in which regulators let entrepreneurs get on with what they do best: investing in new products and improved services that better serve the interests of consumers and companies everywhere. If they can do this – without carrying an unnecessary burden of compliance, reporting and consumer protection to the Nth degree – then they will grow, reinvest and grow more.
We note the Financial Conduct Authority’s (FCA) commitment to focusing on effective regulation and reducing large-scale initiatives. Should the PSR be absorbed by the FCA, it is imperative that any changes do not diminish the quality of regulatory oversight, especially in areas vital to innovation and investment. We believe effective regulation, that enables growth, can be achieved without unnecessary bureaucracy.
Riccardo Tordera, Director of Policy and Government Relations, The Payments Association
We welcome this decision from the government to abolish the Payment Systems Regulator (PSR). The Prime Minister has said that the pervious government hid behind regulators. I want to go further and add: the previous government hid behind regulators issuing wrong regulations.
The PSR very much sealed its own fate by continuing to ignore the industry’s advice on APP fraud. Although it could be commended for its last-minute U-turn to lower the threshold. A long series of mistakes has triggered a complete rethink on the point of its existence. It’s about time a bold decision was made. Go ahead, Keir!
